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Mnuchin Spins a False Claim About Tax Cuts and the Deficit

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The Congressional Budget Office projected last week that the federal government’s fiscal 2018 deficit would total $782 billion. The final numbers will be released by the Treasury Department, but Treasury Secretary Steven Mnuchin is already spinning the bad news.

“People are going to want to say the deficit is because of the tax cuts — that’s not the real story,” he told CNN in an interview Thursday.

“The real story is we made a significant investment in the military which is very, very important, and to get that done we had to increase non-military spending [to win Democratic votes],” Mnuchin said. “If we could have approved that with 51 votes instead of 60 votes, we would not have spent as much money on non-military spending and the budget deficit would have been considerably smaller."

While the spending deal added about $68 billion to the 2018 budget shortfall, fiscal watchdogs say Mnuchin’s claim about tax cuts not adding to the deficit is plainly false.

“The tax cuts are enough to explain more than the entire increase since last year,” Fiscal FactCheck, a project of the Committee for a Responsible Federal Budget, tweeted. Marc Goldwein, the CRFB’s policy director, added that, “of the $782 billion of deficits for 2018, roughly $40 billion is attributable to defense and non-defense cap increases, and another $30 billion is from other parts of the spending deal. $160 billion+ is the result of the tax cuts.”

In other words, if not for the tax cuts, the deficit would have fallen compared with 2017, despite the spending increases.

As editor in chief, Yuval Rosenberg oversees all aspects of The Fiscal Times' website and email newsletter. His writing has appeared in publications including BusinessWeek, CNBC.com, CNNMoney.com, Fast Company, Fortune, Newsweek, Money and Time.